[Edited] IRS Publication 936 states that the taxpayer must have an "ownership interest" in the property in order to deduct mortgage interest on a loan secured by their main home or a second home. Mortgage interest on a home or second home is deductible on Schedule A.
https://www.irs.gov/publications/p936
But if the mortgage proceeds are used on rental property, they become a rental expense, deductible on Schedule E. From page 15 of IRS Publication 535, "Business Expenses":
You can deduct interest on a debt only if you meet all the following requirements.
• You are legally liable for that debt.
• Both you and the lender intend that the debt be repaid.
• You and the lender have a true debtor-creditor relationship.
Page 15 of Publication 535 also states:
Mortgage.
Generally, mortgage interest paid or accrued on real estate you own legally or equitably is deductible.
https://www.irs.gov/publications/p535
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
